Value of Information Technology Goes Beyond Regulatory Compliance

As businesses move beyond cost reduction and toward a growth agenda in 2004, Capgemini US LLC, a global leader in consulting, technology and outsourcing, found that prudent IT investments can drive balance sheet objectives, service level improvements, risk mitigation and management, performance management and cost leadership. According to a Capgemini survey of the more than 200 finance & technology executives attending CFO magazine's IT Value Conference, four in ten (40%) said their CFO's top priority in supporting strategic IT investment to meet business profit and growth goals was moving toward a "variable cost structure and adaptive IT architecture to change quickly to shifting business needs."

Nearly half of respondents (43%) indicated the best example of CFO/CIO collaboration to drive success throughout the organization is "using IT investment to break down functional silos in order to create process-driven, cross-functionally aligned enterprises," compared to another three in ten (32%) who pointed to the creation of a Portfolio Management Office approach to enterprise transformation. In addition, a solid majority (59%) of respondents indicate that organizations are spending what is needed to meet all compliance needs as opposed to imposing cost controls (41%) to meet Sarbanes-Oxley and other regulatory requirements and mandates.

"The pulse survey confirms that good compliance opens doors within the organization to improve processes, to correlate IT spending with business returns and to outsource effectively," said Richard deMoll, Vice President for Finance Transformation at Capgemini. "Companies would be well served if their finance teams redoubled their efforts to manage the risk of outsourcing and shared services, rather than forgoing substantial process and cost improvements.."

The CFO magazine "IT Value" conference was designed to help financial executives discern how spending discipline delivers corporate agility and performance. Dan Farell, senior vice president and former CFO of TXU presented a case study on Capgemini Energy entitled "How Outsourcing Can Leverage Technology to Drive performance in the Utility Industry." The conference also featured keynote addresses from Warren Jenson, chief financial officer of Electronic Arts, Mary Ann Davidson, chief security officer of Oracle and Steve Cakebread, chief financial officer of salesforce.com.

Other survey highlights include:

  • 30% of respondents were from "product industries"
    (energy, automotive, retail, manufacturing), 18% were from "service industries" (telecom, media, entertainment76) while health/life sciences and financial services were tied at 11% each.

  • More than six in ten (61%) believe that 100%
    compliance with all regulatory matters will "somewhat" or "greatly improve" their company's shareholder value.

  • Two-thirds of respondents (66%) said their company's
    board of directors was "somewhat" or "very involved" with the approval of IT budgets and business cases through the capital expenditure request process

  • A slight majority (53%) felt that greater regulatory
    compliance scrutiny has led to greater involvement from the finance department in IT decision making.

  • The top two threats to IT security among respondents
    were protecting intellectual property (35%) and identity fraud (28%).

  • The top three reasons why CFOs are considering IT or
    business process outsourcing are "enable management to more effectively focus on core business" - 30%; "changing business environment necessitates a flexible solution" - 21%; and "imperative for improvement in business support functions in both cost and service" - 21%.

  • Nearly the same number of respondents said labor
    arbitrage was the most important savings lever to use an offshore outsourcing provider than economies of scale (38% to 33%), while only one in eight (12%) pointed to technology innovation as the prime savings lever.

  • Just over half (55%) said the current US political
    and regulatory debate over offshore outsourcing has had no impact on their company's long-term interest in offshore outsourcing.

Survey responses may not add up to 100% due to multiple responses.

For complete survey results, visit www.us.capgemini.com. For more information on CFO Executive Programs and CFO conferences, visit CFO.com.

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